Recent Posts

I will not do office hours this evening but I will do one final
office hours next Monday, Oct 29th, from 6pm to 6:30pm. The link
to attend that office hours is here.

For this final post, I want to focus on the Business Model Canvas
and how to think about sustainability in the context of creating
your business model. In order to talk about that, I went ahead
and created a Business Model Canvas of my own using bmfiddle.com.

If you think about banks in the real world, they are high cost
affairs, with huge fixed costs including large branch networks. I
am always shocked by how many bank branches I pass in a five to
six block walk in NYC. The way these banks sustain these high
costs is with large fees for depositors and high spreads between
their cost of funds and the interest rates they charge borrowers.

So in thinking about how to create a sustainable Bitcoin Bank, I
focused on a few key things:

1) keep the operating costs super low except in areas where there
is a unique and important consumer value proposition

2) make it easy to access the bank and your balances within the
context of low operating costs

3) keep the fees charged to customers as low as possible

4) allow third parties to build busineses on top of our business

The result is a super simple business model. My Bitcoin Bank
would charge a very low monthly fee per Bitcoin deposited and
nothing else other than pass alongs for any costs incurred in
moving bitcoins in and out of the bank on behalf of our
customers. We would not have any branches. We would operate via
simple, easy to use mobile and web interfaces. We would keep our
operating costs super low with the exception of one area where we
would make a large and ongoing investment - in hiring and
retaining a top notch and super experienced security team. We
would allow third parties to create related businesses on top of
our API. Services like lending, investing, etc would not be
provided by our bank but by third parties who access our
customers via our API.

I believe this business would be highly sustainable because it
would focus on one very simple value proposition - security. And
in return it would charge the lowest fees possible in order to
make and sustain a profit. It would make it very difficult for
others to price lower fees for storage and security. And it would
benefit from the ecosystem of third party value added service
providers operating on top of its API.

Here are some decisions I made in order to increase the
sustainability of the business:

1) A focus on very low fees to our customers so that it will be
difficult for competitors to undercut our offering.

2) A decision to focus on only one thing, security, and allow
others to build additional services for our customers. This
allows us to be best in class at the one thing we choose to do
and it means our customers can choose to pay for additional
services or not, and always on their own terms.

3) A cost model that keeps operating costs as low as possible in
all areas other than security, which is our key consumer value
proposition.

So when you are finalizing your Business Model Canvas for your
final project for this course, think about what your key value
proposition is and who is your primary customer and focus on
that. And think about what you can do in your revenue model to
make it so that it will be hard for others to come in and
undercut you. And think about your cost model and how to keep it
as low as possible while allowing your company to be best in
class at what it does.

Please submit your final Business Model Canvas project here by Thursday, Oct 25th,
11pm EDT. I will pick out a bunch that I like and review them
next week on office hours.

That will be the final event in this course. I hope you have
enjoyed this class/series. I think sustainability is an important
and overlooked aspect of business and it needs to built more
tightly into business thinking.